Gold & silver at Record Highs: Bubble or Bull Run

Indeed, the upward trajectory showed no signs of slowing down in October. As of Wednesday, 1 October 2025, the front-month gold futures contract, traded on the New York Commodity Exchange (COMEX), hit a new all-time high (ATH). The contract was up $46.00, or 1.19%, to settle at $3,919 per ounce (oz) by 8:00 a.m. UTC. This historic level capped a stellar September performance where the contract gained over 10% and brought the year-to-date (YTD) increase to an extraordinary 49%.

Silver recorded an even more impressive performance, benefiting not only from its safe-haven status but also from growing industrial demand. As of 1 October, the front-month silver futures contract was trading near $47.20 per oz, having clocked a colossal YTD rise of nearly 70%.

With both metals charting new highs, investors doubt whether it is a sustainable bull market or a potential speculative bubble. Kar Yong Ang, a financial market analyst at Octa, deciphers the rally and shares potential price movements.

Key Drivers for Gold

Precious metals have long attracted investors due to a broad mix of factors, ranging from the safe-haven demand spurred by geopolitical tensions to deep-seated anxieties over rising global debt and the ongoing de-dollarization efforts. However, the intensity of the latest price spike seems to be purely the result of macroeconomic forces. Gold‘s surge of nearly 7% last week came on the back of Friday’s U.S. inflation data, which matched market’s forecasts and reinforced bets that the Federal Reserve (Fed) may continue with interest rate cuts later this year. Data showed that the U.S. Personal Consumption Expenditures (PCE) price index rose 2.7% year-on-year in August, in line with economists’ expectations. Investors now see a 95% probability of a rate cut in October, according to the CME FedWatch Tool^[1].

This highly dovish outlook has weighed on the greenback, with the U.S. dollar index (DXY) continuing to trade not far from its multi-year lows. In addition, the political gridlock in Congress has introduced an additional layer of uncertainty. ‘Government shutdown threatens to delay the release of key economic data, such as the Nonfarm Payrolls report’, notes Kar Yong Ang, adding that the data vacuum hinders the Fed’s ability to assess the economy, increasing market anxiety and driving capital into non-yielding gold. ‘Precious metals look very attractive not only because a weaker dollar naturally boosts the purchasing power of overseas buyers of dollar-denominated assets, including gold and silver, but also because the environment of declining real yields significantly lowers the opportunity cost of holding these non-interest-bearing metals’, concludes Kar Yong Ang.

The rally is also reinforced by heightened geopolitical risks that traditionally support gold’s safe-haven demand. The recent escalation in the Russia–NATO tensions and renewed U.S. commitments to supply advanced weaponry to Ukraine have eroded earlier market hopes of a settlement following the Putin–Trump talks in Alaska.

Key Drivers for Silver

While gold’s greater scarcity and monetary use naturally dictate its higher valuation, a powerful combination of favourable investment trends, surging industrial demand, and persistent supply bottlenecks suggests that silver is primed for a significant rally to reduce the value gap.

• The gold–silver ratio remains elevated at around 86, just slightly above its five-year average of 82, implying silver still has some room to narrow the gap with gold. Investors are increasingly rotating into silver and platinum as more affordable alternatives to gold, particularly as gold prices approach $4,000 per oz.
• Significant industrial demand, which accounts for 58% of total global demand, further boosts the prices. The market expects even stronger industrial activity in the face of anticipated rate cuts later this year. Moreover, China’s recent pledge to cut net carbon emissions by 7–10% by 2035^[2] is likely to accelerate the adoption of solar technologies, where silver is a critical component in photovoltaic cells.
• On the supply side, silver experiences a persistent shortfall for several years. A recent force majeure at Freeport’s Grasberg copper mine^[3] raised further concerns about short-term availability. The incident may result in 591,000 tons of lost copper output, of which silver is an important byproduct.

Signs Supporting a Solid Bull Run

Structural drivers suggest that the current gold and silver rally isn’t mere speculation. The Fed’s recent monetary policy shift, which is expected to continue later this year, the weakened U.S. dollar, and rising uncertainty due to geopolitical escalation and the U.S government shutdown reinforce the role of precious metals as effective hedges against currency volatility. Moreover, strong demand from central banks supports an uptrend. According to a recent World Gold Council survey, 95% of central banks plan to increase their gold holdings over the next 12 months, while nearly three-quarters expect to reduce their dollar reserves^[4].

Factors that Suggest Bubble Risks

While the rally is underpinned by clear macroeconomic drivers, the speed and magnitude of recent gains raise concerns about potential market overheating. With gold setting new ATHs since the beginning of the year and silver surging to more than a 14-year peak, the market observes one of the sharpest increases in recent times. The gold–silver ratio remains above its long-term average, implying that silver’s relative outperformance could still overshoot if investors continue to rotate aggressively into alternatives to gold. At the same time, inflows into gold- and silver-backed ETFs suggest speculative participation is accelerating, which can make price action more fragile in the case of sentiment shifts.

‘From a technical standpoint, both gold and silver are looking stretched—we’re clearly in overbought territory. That leaves the assets vulnerable to a near-term shakeout if the macro fundamentals shift. A strong NFP report or a more hawkish Fed pivot could take some air out of the trade, while any de-escalation on the geopolitical front would also sap safe-haven flows. In other words, positioning looks crowded, and the risk of near-term correction increases’, notes Kar Yong Ang.

Conclusion

The current rally appears to be a solid bull run supported by macro fundamentals, rather than a speculative bubble. Still, the risk of a short-term correction is viable, particularly due to overbought technical signals and the sensitivity of precious metals to shifts in monetary policy and geopolitical landscape. Traders should avoid spontaneous decisions and apply strong risk management to withstand sudden volatility. While technical signals remain vital for financial decisions, fundamental factors may significantly affect the further assets trajectory. Hence, monitoring key economic and political events is crucial.

‘The most obvious target for bulls is 3,996-4,000 area’, notes Kar Yong Ang. ‘However, a failure to hold above 3,890 may prompt a sell-off towards the 3,856-3,840 zone, a break below which would open the way towards 3,705’.

Gold Daily Technical Chart

Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk—Octa does not accept any liability for any resulting losses or consequences.

1. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html ↑
2. https://www.bbc.com/news/articles/cj4y159190go ↑
3. https://www.reuters.com/markets/commodities/grasberg-disaster-highlights-fragility-copper-supply-chain-2025-09-29/ ↑
4. https://www.reuters.com/business/central-banks-favour-gold-over-dollar-reserves-wgc-survey-2025-06-17/? ↑